Hello, President Obama, you stole my thunder. I was planning on blogging about financial inequalities and you go and make it headline news. Er, thanks. I guess I’ll blog anyway. A new datum inspired me. Wealth continues to concentrate. It isn’t the only thing tending towards an extreme; and extremes are not sustainable.

An argument has been made that poverty is inevitable. The Bible even quotes Jesus as saying, “The poor you will always have with you . . .” Given a large enough population there will probably always be someone who has had bad luck. But things are getting a bit out of proportion.

Wealth and income inequity in America have become so common that we collectively know it is out of balance, and are terrible at guessing how extreme the imbalance has become. The concentration of wealth is such that even the bottom half of the 1% are dramatically poorer than the wealthiest Americans.

Folks in the United Kingdom, arguably more socialist than the US, has wealth concentration. But then, royalty has been part of their culture. Of course, even the Queen’s reserve is down to less than the price of some waterfront houses in my vicinity.

Globally, no one is surprised that globally the wealth isn’t evenly distributed. The disparity is enough to steer some vacationers from the poorest destinations, even though they are inexpensive. Of course, globally, it is easy to see the issue as “someone else’s problem”.

Words, like inequity and disparity, may not be as effective as numbers. Math makes it too abstract. But numbers may help illustrate a different world. (Pardon the language, but he makes a good point.)

I’ve replicated the exercise from that last link here, and continued it down below because making people wade through 1,000,000,000 is too disruptive. Of course, maybe that’s what we need.

$100,000 = a small house for some; a very nice car for others; six years of living expenses for someone at the poverty line (and about 15% of Americans are below the poverty line)

$100,000 $100,000 $100,000 $100,000 $100,000 = a nice house, unless you’re in downtown New York, San Francisco, or really most any large city; or about enough for frugal people to retire, if they’re lucky

one million
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 = a nice home almost anywhere; and a good retirement package, though some recommend triple this amount

If you really want to scroll through one hundred million and one billion, check the bottom of the blog. Reality no longer applies in that realm. (My house is in there somewhere.)

Wealth is not just being concentrated in bank accounts.

The Super Bowl is coming up. Witness arenas that cost hundreds of millions, that receive tax benefits, that rarely pay for themselves, that are justified by the luxury boxes, that host sporting events between millionaires, and that draw advertisers but not tax collectors. Are we really that enthusiastic about sports? Great! Let’s take even a tenth of the cost of each stadium and devote it to playgrounds, ball fields, and equipment before we ever negotiate another stadium.

The opera and the ballet have much lower budgets than sports, and definitely lower salaries yet even their edifices are grand concentrations when compared to the need for neighborhood places for kids and beginning artists. How about shoring up the local theaters, paying their staff, and creating places for creativity?

Education has changed as more attention is paid to the most prestigious colleges. Parents who did very well going to state colleges demand to send their children to Harvard and Stanford. Supply and demand drives up prices, regardless of the rationalizations produced by administrators. The irony is that most college degrees have a rough time paying back the investment; especially, considering the current student loan environment.

Even the stock market is seeing concentrations. As wealth concentrates it tends to move around in bigger chunks. If you have a hundred million to invest, it is far easier to buy a small slice of MSFT than to have to buy 100% of three MVISs. I think this is one reason the markets are reaching records, while the profits are going to a few, and while startups are struggling for funds and small companies are seeing small valuations.

Concentrations carried to an extreme eventually dissipate. A recent TED Talk suggests that may be about to happen. As a rule, the denser the concentration, the more rapid and pervasive the dissipation.

Two quotes passed along by friends sit oddly beside each other.
A quote passed along by Steve Smolinsky via twitter (@smolinsky); ‘Thought from a billionaire on income inequality: “When I hear the market went up I know the guillotines are coming closer.” ‘
A comment made by someone who has been working too hard without enough support; “If the system is going to collapse I wish it would do it soon. Trying to fix it is taking too much out of too many.” (paraphrased)

I’m glad the President of the United States is talking about alleviating inequalities and inequities. That fact that his statement stands out is a statement. Government should always be working, not just talking, about alleviating inequalities and inequities. If we’re just starting to have the conversation, then we’ll probably hit some limit before we enact a reasonable solution. I expect little from government because money and power have become synonymous, and if money is concentrated then power is concentrated. The poor have always been with us. So have the rich. But, even in the ages of true kings and queens, empresses and emperors, we’ve probably never witnessed a time when the 85 richest people on the planet were worth more than billions of their fellow humans.

The dissipation will probably happen, but I don’t want to concentrate on it – though I know I won’t be able to ignore it.